By Lori Schock, Director of the SEC’s Office of Investor Education and Advocacy
Should you or shouldn’t you buy the latest new cryptocurrency or token? I can’t tell you how many people have come up to me and asked if they should invest in bitcoin. I recently conducted an investor education program at a retirement community and a woman said to me, “My children keep telling me I need to hurry up and invest in bitcoin—is it safe, have I already missed the boat?” Seniors are not the only ones interested in bitcoin and other cryptocurrency-related investments. Millennials are also jumping on the bandwagon. While I can’t give investment advice about bitcoin or any other cryptocurrency-related investment or product, I can provide advice on some things you should consider when deciding if an investment is right for you.
Perhaps the most important thing to know is the cryptocurrency-related investment markets are very different than our regulated securities markets. For example, our securities laws provide important protections that you may not be getting when dealing in cryptocurrency-related investments. In many cases you may not know exactly who you are dealing with, where your money is going or what you are getting in return. For more detailed information, you can check out SEC Chairman Jay Clayton’s statement on cryptocurrencies and initial coin offerings (ICOs) and the Office of Investor Education and Advocacy’s investor bulletin on ICOs.
These digital assets have been trending and receiving the attention of celebrities, often through endorsements. You may see them on social media, radio or TV promoting bitcoin and a variety of other products and services. Never make an investment decision based solely on celebrity endorsements. Just because your favorite celebrity says a product or service is a good investment doesn’t mean it is. Always do thorough, independent research of the product.
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